Weekly Business Bulletin: 6th December

Domestic

Volkswagen has announced a 20% reduction in sales this week, as the company continues to recover from the emissions rigging scandal. Although fluctuations in the car market are normal, the Volkswagen group has struggled to re-build trust in the brand, especially as the scandal has left the United States with cars now affected across the European Union.

Rail fares have increased to 1.1%, the lowest level in six years. This is due to fare increases being capped by the government at RPI – Retail Prices Index – inflation which for the month of July was 1%. Unregulated fares such as off-peak leisure tickets can still increase at the train companies discretion, so for the travelling public unregulated fares are likely to be increase.

Yesterday saw the passing of Small Business Saturday, a scheme designed to encourage shoppers to spend money in local small business and independent stores. The scheme, which was launched 3 years ago, aims to stimulate the ailing high street and promote smaller business compared to larger companies. The scheme is being pushed by the government which wants to help small firms by cutting regulation.

UK foreign investment is at a 10 year low. The Office for National Statistics has said this is the first time UK firms have reduced net foreign investment in over a decade. The total amount of money invested overseas by UK companies fell to £1.15trn in 2014 from £1.25trn in 2013 indicating a reluctance by business to invest. However, this could be good news for the UK as more firms choose to invest here rather than overseas.

International

Brazil’s woes continue as the country’s recession deepens in the third quarter. The third quarter figures show the economy contracted by 1.7%. Overall, Brazil’s economy is 4.5% smaller than a year ago, with the latest figures suggesting that the situation is likely to get worse. Foreign investment has declined to a 10 year low. The country has also received a credit rating downgrade to Junk status: the lowest rating. The Brazilian president, Ms Rousseff is fighting many fires with unemployment soaring, inflation rising and corruption in the state-owned oil company Petrobras.

U.S employment figures have showed signs of improvement. The figures show that 211,000 more people are in work in November indicating a stabilising of the U.S jobs market, which over the summer had proved underwhelming. The unemployment rate has maintained it’s seven and a half year low at 5%. The Federal Reserve chairwoman, Janet Yellen has signalled that an interest rate rise as early as next month indicating that there is greater optimism about the state of the U.S economy.

Canada has come out of recession. Third quarter statistics have shown that the economy exited recession based on an increase in exports. The economy also witnessed higher levels of consumer spending and a buoyant housing market which assisted in bringing Canada out of recession.

Russia has halted a proposed oil and gas pipeline project with Turkey. This is obviously in retaliation to the shooting down of a Russian jet by the Turkish military last week. This is just one of a number of economic sanctions designed to punish turkey for the downing of the jet. The Turkstream project which is designed to take gas across the Black Sea has now been shelved.Turkey is Russia’s second biggest gas consumer after Germany.